Jury in Martin Shkreli Fraud Trial Has Questions for the Judge

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Jurors convicted Martin Shkreli of securities fraud involving his two hedge funds and conspiracy to defraud a pharmaceutical company even though investors apparently did not lose money.CreditDrew Angerer/Getty Images

The first substantive note from jurors in Martin Shkreli’s fraud trial asked on Tuesday about assets under management and what “fraudulent intent” meant.

The jurors had been deliberating for more than a day and a half in Mr. Shkreli’s trial in the Federal District Court in Brooklyn. They had not asked any questions other than, on Monday, what time they were supposed to leave at night.

The questions were: “Do assets under management refer to a particular fund being described, or to all assets managed by the portfolio manager/general partner?” They also asked for a legal definition of assets under management. And they asked for an expansion or elaboration of the term “fraudulent intent,” a key to the defense’s arguments that Mr. Shkreli is innocent.

The note seemed to be a good sign in the defense’s eyes; Mr. Shkreli’s lawyer, Benjamin Brafman, gave a quick smile after reading it, and after he spoke to Mr. Shkreli, Mr. Shkreli also gave a little smile.

Mr. Shkreli is charged with eight counts of securities and wire fraud. Prosecutors argued he lied to investors in two hedge funds, MSMB Capital and MSMB Healthcare, by making claims like the one that he was using a specific auditor and law firm, when he wasn’t. He sent them fake statements showing their money was growing, when in fact the accounts for the funds were nearly empty.

Prosecutors also say that at Retrophin, a pharmaceutical company he founded, Mr. Shkreli arranged to pay the defrauded MSMB investors by creating fake agreements making it look like the investors were consulting for Retrophin, or signing settlement agreements requiring Retrophin to pay the investors, when Retrophin had no such responsibility. Finally, prosecutors charged that he secretly controlled a huge portion of Retrophin stock by giving shares to associates and telling them to buy, sell or reassign the shares, and did not disclose that.

A center of Mr. Brafman’s defense was that Mr. Shkreli didn’t intend to commit fraud, and he said in his closing argument that “good faith can, in this case, be a complete defense to every one of the charges.” He asked why Mr. Shkreli would have bothered going on to repay the MSMB investors when he could have just walked away, and argued Mr. Shkreli didn’t really profit from the scheme at all.

As for assets under management, that was a claim that Mr. Shkreli made to MSMB hedge-fund investors, which prosecutors said was false. One investor in his hedge fund MSMB Capital testified Mr. Shkreli had told her he had $40 million to $50 million in assets under management. Another testified Mr. Shkreli had claimed he had $35 million in assets under management.

Mr. Shkreli later told the Securities and Exchange Commission, according to a document shown at trial, that MSMB Capital never had more than $3 million under management.

The defense claimed that when Mr. Shkreli gave those figures, he included the assets of a rich Texas investor he advised, a man named Josiah Austin. But Mr. Austin testified that after an investment in a separate fund, started and closed earlier by Mr. Shkreli, went south, he did not invest with Mr. Shkreli again. After that, Mr. Austin testified, Mr. Shkreli could not trade for him or buy or sell stock on his behalf.

After a discussion with lawyers for both sides, Judge Kiyo A. Matsumoto told jurors that there was no legal definition of assets under management. What Mr. Shkreli “intended when he used the term,” she said, “is an issue in dispute for you, the jury, to resolve.” For the question about fraudulent intent, she referred them to the jury instructions she had read to them on Friday.

The jurors deliberated until a little after 5 p.m. on Tuesday; they will continue deliberating on Wednesday.

A version of this article appears in print on , on Page B6 of the New York edition with the headline: Jurors in Shkreli Trial Question Judge on the Meaning of ‘Fraudulent Intent’. Order Reprints | Today’s Paper | Subscribe